Wall Street is expected to see a slight decline, following European markets that are also down after China’s economic stimulus announcement. Futures suggest minor drops for major U.S. indices. European stocks like the CAC 40 and DAX have fallen, reflecting concerns over China’s support measures. Analysts remain cautious about the impact of Donald Trump’s election on market dynamics. Additionally, oil prices have dropped sharply, influenced by Hurricane Rafael’s aftermath.
Wall Street Forecast: A Slight Decline Ahead
On Friday, Wall Street is anticipated to experience a downturn, while European stock markets are also witnessing declines following the recent announcements regarding China’s economic stimulus plan. This news comes in the wake of Donald Trump’s election, which has led to market adjustments.
Futures for New York indices indicate a subdued opening, with the Dow Jones expected to decrease by 0.01%. Meanwhile, the Standard & Poor’s 500 is projected to fall by 0.11%, and the Nasdaq is likely to drop by 0.29%.
European Markets React to China’s Stimulus Measures
In Paris, the CAC 40 is down 0.71% at 7,372.51 points around 12:05 GMT. Frankfurt’s Dax is also down by 0.75%, while London’s FTSE experiences a decline of 0.89%. The pan-European FTSEurofirst 300 has lost 0.7%, and both the EuroStoxx 50 and Stoxx 600 have fallen by 0.7% and 0.54%, respectively.
The markets are retreating following China’s announcement of a new support plan aimed at bolstering its economy. Local governments will be permitted to issue an additional 6 trillion yuan (approximately 777.3 billion euros) in bonds over the next three years to address off-balance-sheet debts, as stated by a Chinese official on Friday.
Analysts at ING noted, “The nature and scale of the measures announced were well communicated in advance, and ultimately, the scale of the measures was in line with expectations.” However, the initial market reaction has been negative, as there were hopes that Trump’s victory would influence the nature of the stimulus measures.
As traders continue to analyze the implications of Trump’s election victory, they remain cautious. “The response from risky asset markets has been quite positive since the election results were announced,” highlighted Florent Wabont, an economist at Ecofi. However, he warns that in the medium term, risky assets may still face vulnerabilities due to high valuation levels, uncertain monetary policies, and ongoing trade tensions.
On Wall Street, Airbnb has reported third-quarter revenue that narrowly exceeds expectations, bolstered by strong growth in Asia-Pacific and Latin America. In Europe, Euronext shares are down 1.9% following a disappointing EBITDA growth forecast. JCDecaux’s shares have declined by 8.9% due to a less favorable outlook for the fourth quarter.
Conversely, Atos has announced a capital increase of approximately 233 million euros, leading to a 5.5% boost in its stock. Luxury brand Richemont’s shares fell by 4.3% after disappointing results, putting pressure on competitors like LVMH, Hermes, and Kering.
In terms of market rates, U.S. yields have returned to pre-election levels, with the yield on ten-year Treasury bonds decreasing by 3.5 basis points to 4.3082%. The two-year note yield dropped by 4.1 basis points to 4.1786%. In Germany, the yield on ten-year bonds fell by 3.8 basis points to 2.403%, while two-year rates remained stable at 2.209%.
The currency market has also seen fluctuations, with the dollar weakening after reaching a four-month high. The dollar is down 0.07% against a basket of major currencies, while the euro and British pound have also experienced minor declines.
Finally, oil prices are experiencing a sharp drop, with Brent crude falling by 1.11% to $74.79 per barrel, and U.S. light crude (WTI) down by 1.37% to $71.37. This decline follows the weakening of Hurricane Rafael, which had previously forced Gulf of Mexico producers to slow their operations.